VAT refunds under the Non-Resident Refund Scheme

On 16 February 2023, the Zakat, Tax and Customs Authority (ZATCA) published a guideline outlining the requirements of a two-stage process for non-resident businesses to submit refund applications for Value Added Tax (VAT) incurred on supplies. Although this process has been available in the law since the inception of VAT in the Kingdom of Saudi Arabia (KSA), it has only recently come into practical force.

Key considerations for non-resident businesses incurring VAT in Saudi Arabia: 

• Deadline – Businesses have six months from the end of the calendar year to submit the VAT refund application. For example, the deadline to submit the application for the calendar year ending on 31 December 2022 is 30 June 2023.
• Processing time – As per the guidelines, ZATCA has mentioned that the applications will be processed within a reasonable time. The authority highlighted that providing all the data accurately would significantly speed up the processing of the refund application.
• Disputes – In case ZATCA fully/partially rejects the refund claim, the non-resident business has the right to submit an objection to the dispute committee.
• Past period refunds – As per discussions with ZATCA regarding the VAT refund applications for calendar years 2018 to 2021, businesses who have submitted a protective claim letter within the deadline may be eligible to claim the refund.  Businesses who have not yet submitted the previous years’ claims may submit an application, however it is at the discretion of ZATCA to accept these applications.

The publication of this guideline is good news for non-resident businesses that have incurred VAT on costs in KSA as the claims process is now up and running.

How can Deloitte help?

We have a dedicated team of KSA VAT refund experts within our Tax practice. We have successfully assisted businesses to apply for, and obtain the Eligible Person status from ZATCA. This is the first step for the businesses to recover the accumulated VAT and to optimize the absolute cash position of the business.

Given the relative novelty of this procedure our experience has shown that close liaison with the tax authorities is important. Considering the complexity of the process, and the information that will need to be gathered, coupled with the fast-approaching deadline, we suggest that businesses should start early in order to ensure that the refund application is submitted before 30 June 2023.